Sheffield Wednesday’s “Imminent” Investment

Sheffield Wednesday have been in a state of flux for the last decade or so, since the reign of the current Premier League Chairman, Dave Richards. Mark Murphy takes a look at the Wednesday chairman Lee Strafford’s attempts to get somebody to pour some money into the club and finds a rather long list of near misses. Still, at least they haven’t been to the High Court yet.

The February and March headlines in the Sheffield Star newspaper would have made encouraging reading for Sheffield Wednesday:

The problem was they were headlines from February and March… 2008, and Wednesday’s was a takeover tale that was dragging on a bit even then. The headline “Casino boss in Owls takeover talks” was already over a year old, and the casino boss in question was one Carson Yeung, now doing the work of a grateful nation by getting up David Sullivan’s nose on a regular basis in his role as Birmingham City major shareholder.

Some of the unfounded takeover rumours were, shall we say, imaginative. Not least the one about former Manchester United big-man Martin Edwards, which was based on Edwards’ car appearing in the Wednesday car park. This was a tenuous enough link even before it was established that the car merely belonged ‘some bloke’ called Martin Edwards, who noted that he was “about £200m behind” the former Man Yoo man. And one nearly won an award. Unfortunately the award in question was Private Eye’s Paul Foot Award for Campaign Journalism. Yorkshire Post journalist Rob Waugh came runner-up for exposing the 2008 Geoff Sheard-fronted takeover as a sham which had been based on proof of funds so see-through it could have served as tracing paper. In fact, it was so flimsy that even Munto Finance would have rejected it as lacking credibility.

Last year, the Owls were “set for imminent investment” (31 July 2009) and were “close to a £20m deal” (16 December 2009). At least they were when they were “not heading for administration” (4 March 2010). This latest tale has its origins in the immediate aftermath of Sheard’s shenanigans. In November 2008, two optimistic local businessmen, Lee Strafford and Nick Parker, joined the Wednesday board as lots of warm noises emanated from the club’s AGM about “significant progress…in the search for new investment” – “investment” usurping “takeover” as the buzzword. Based on not being any of the old guard of failed Wednesday directors and no-one else wanting the job, Strafford quickly became Wednesday chairman and set a March 31st 2009 deadline for this investment.

The first story to emerge from these new board appointments was a “Complex deal to bring £50m to Hillsborough” (8 January), with talk of a “four-party syndicate drawn from three continents” – a mixture of “investment institutions” and “wealthy individuals” who, I’m sure most of you will have guessed by now, were “mystery.” Joining the Sheffield telephone directory on the list of “investment institution” sceptics was former takeover tale bete noire Dave Allen, who dismissed Strafford’s investors as “all spin, hype and talk.” Annoyingly for those who remembered his unsuccessful, bitter time as Wednesday chairman, he was largely right.

Strafford’s March 31st deadline was quickly dropped after the club’s major creditors failed to “agree on a structure that would maximise the potential benefit any investment would bring to the club.” Most creditors agreed to write-off a portion of their due money. The Co-operative Bank, owed £21m of Wednesday’s £25m+ debt, lived right up to their name and agreed a partial write-off. Allen, owed £2m, didn’t, asking, pertinently alas: “Why are (these investors) always a mystery.” Hopes were raised, though perhaps not in certain parts of Derbyshire, that Allen’s burgeoning involvement with Chesterfield might force him to cut his financial ties with Wednesday. But Allen re-emphasised, in the manner which endeared him to so many, that “No line will be drawn under the Dave Allen issue until…my loans are paid back in full.”

It was back to square one for Strafford. But within a month, newspaper offices were exhuming their “Owls takeover” templates again, as Strafford looked to use his apparently extensive business contracts in America to re-energise the investment search. Allied to this came a migraine-inducingly detailed business plan for the club; published during the close season and designed to make Wednesday “a more attractive proposition for potential investors.” It was largely a cosmetic exercise, a bit too much “SWFC brand” for some tastes and, according to Strafford, an “evolutionary entity”, whatever that was.

But the club had been chronically mismanaged for years. So such cosmetic surgery was as required as it was welcome. At the height of the close season, New York investment bank Inner Circle Sports were brought in to secure the US investment which now appeared to be the specific target. Inner Circle had played a part in the good, the bad and the ugly of US involvement in English football, with links to takeovers at Sunderland (good) and Liverpool (bad and ugly). “They don’t take deals on that harm their brand,” Strafford noted, raising and lowering spirits in the same short sentence. Parker, now Wednesday Chief Executive, described Wednesday, equally dispiritingly, as “a ‘growing the asset value’ opportunity.” And “pretty well unique, in that we are cash-generative.” And fans waited…and waited.

Only in December did the latest future owners emerge, “Club 9 Sports”, evocatively described as “a joint venture between a sport management and media advisory company, Tobacco Road Capitalists (Lou Rawls in a suit?), and a merchant bank, Prometheus Capital Partners. By then, fans’ patience was wearing thin, with reported progress on aspects of Strafford and Parker’s business plan overwhelmed by Wednesday’s slide down the Championship table towards potential local derbies next season with temporarily Sheffield-based Rotherham, heavily embroiled in the League Two promotion scrap.

Shortly after Club 9 Sports were outed in the media, Strafford gave an oddball exclusive interview to the Sheffield Star in which he revealed “I’ve had death threats” from “people intent on holding this club back.” This seemed out of perspective with what had previously been little more than irritable impatience from Wednesday-ites. Strafford and his people were little worse than damned by faint praise at Wednesday’s November AGM, and were even praised to the hilt for some decisions, such as giving former club chief executive Kaven Walker the heave-ho. Strafford then raised all remaining unraised eyebrows by declaring that he would “walk away if someone…who is not a crook comes along.” And he revealed a little later that “a lot of crooks have shown an interest but they won’t get a look in.” Who these crooks were, he didn’t specify. And, anyway, the Football League’s regulations governing fit and proper persons would…no, I’ll stop there.

Strafford used the Star interview to urge fans to renew their season tickets “earlier than ever before” and to take advantage of the sort of discount scheme which is currently all the rage among the cash-strapped masses. “If fans don’t back me on this,” Strafford concluded, in full doomsday scenario mode, “we will be forced to carry on as was, and that cannot be an option.” By early March, Strafford was furiously denying to all who wanted to listen (and others) that the Co-op bank were not about to “drop us into administration,” a scenario which hadn’t occurred to everyone…until then.

It was a stark reminder that although the Co-Op were continuing to co-op over their slice of Wednesday’s debt, others – mentioning no names because that would be unfair on Dave Allen – were still expecting full repayment – in Allen’s case, by May. The urgency of the talks with Club 9 Sports now established, it was a little disturbing, therefore, to discover how little detail there is of the American’s proposals. There is to be none of this fancy “buying shares in the company” malarkey. In fact, “at no stage have we discussed the possibility of buying shares in Sheffield Wednesday plc.” Instead, there’s been a series of intentions so vague they’re almost not there. “Discussions”, apparently, “have been with a view to find an appropriate structure that will allow us to become part of the Wednesday family.” And, a statement from Club 9 Sports’ managing partner John Prutch declared, “we are pursuing a deal by which our capital and skills can be utilised to assist the current management team.” Enough wool for a field of sheep, which one can only hope won’t be used for pulling over fans’ eyes.

Wednesday, therefore, are at as much of a crossroads as any of their cash-strapped Football League colleagues, if not yet at the gates of the High Court. If Club 9 Sports’ assistance can stretch to paying off Allen, a lot of fans will breathe easier, not least because the last vestiges of the old failed Wednesday regimes will then finally disappear. But while talks continue, so does Wednesday’s risk of the drop – without Luke Varney’s 89th minute winner against Watford this week, Wednesday would only be kept out of the bottom three by Crystal Palace’s “drop” into administration. And May could be a double whammy unless Allen has a personality transplant in the meantime and cedes ground on his loan repayment. Sheffield Wednesday’s current situation could be a lot worse. But it could get a lot worse yet.

25 Responses

Errrm you might want to check your facts ‘Mark’. Due to the deed of priorities over our debts, while Mr. Allen’s loan may need to be re-negotiated in May, it is in no way repayable until such times as our debt with the Co-op is under the £14m mark.

And Lee Strafford was hardly ranting and raving about us not going into administration. He was answering fans’ concerns over the issue, nothing more. He would sooner come out and rubbish such claims than letting unwarranted speculation fester, something he should be praised for.

Yes, I may have misunderstood. I assumed that the Co-op’s proposed write-off of part of the money owed to them would trigger re-payment of Allen’s loans, at least if he demanded it, which he seems/seemed determined to do. Sorry if that IS a misunderstanding on my part.

Re: Strafford’s adminstration denials. I was emphasising that he’s been saying it a LOT, it hasn’t been one interview/set of quotes syndicated across the whole media network. It’s his doomsday scenario, not mine. No criticism intended.

The vultures must be circling if we appear on 200percent. The big concern is that for all Strafford’s evangelical zeal, it’s very difficult to envisage anyone with any sense investing in a club with Wednesday’s level of debt in the teeth of a recession. Assuming that’s the case then the club is barely a going concern – even if we avoid relegation will we improve significantly on the field next year? How patient will the Co-Op be in the face of further financial losses? Season tickets were placed on sale in January which raises cash flow concerns. It’s fair to say that sales have been slow and the club has been forced into embarrassing deadline extensions.

Personally i would be very suprised of any imminent investement, i think we will be struggling for a long time unless a manager hopefully A.I can pull off a miracle and get us out of this league and into the premiership. However league one is looking more of a real prospect then that.

Lee Strafford did recieve death threats and much abuse on his facebook wall, I read some of it myself, and given the way the Star presented that interview and their usual top notch journalism Iwouldn’t be suprised if it was a passing comment from LS which the Star turned into the focal point

Whether he should have it opened his facebook account up to the public or not is a different matter

While much of what is written is factual,there are, for whatever reason, some fairly pointless digs at the chairman in there, and at the same time the article appears to at best cheapen, and at worst totally ignore the value of the ‘cosmetic’ work that has been achieved in what is relativley speaking a short tenure so far by LS & NP.

I have heard that Strafford has been quite active at various times on Owls message boards which seems extraordinarily foolhardy, albeit also quite admirable. The problem with this “glasnost” approach is that it can come back and bite you quite badly when difficult decisions need to be made. Wednesday’s size as a club leads one to forget how cash strapped they are – they may be in the relegation shake up but defeats like the one to Doncaster in February still seem humiliating even though the smaller club are a tighter ship at the moment. As for the litany of suitors, I wonder if P Diddy has been linked as he has been with the Palace?

It’s worth also noting that Strafford has said that Wednesday don’t necessarily need investment, and that there is a business plan in place if no takeover / extra cash happens. Unfortunately this plan appears to be based around fabulously over-optimistic attendance projections (28000 in 2011-12) and selling season tickets in October with ever-extending deadlines for said sales.

Not sure why people have this myth that the Loan Notes cannot be called until the debt is under 14mm – that only applies to early repayment, when they’re due, they’re due, as long as 75% of the loan note holders vote to ask for repayment. Same is true of the A notes, but there is an agreement in place they (the note holders) won’t ask for repayment before 12 months after the ratification of the last accounts (so presumably May 2010 is accurate).

Also the old chestnut about Allen’s notes being at some mythically high level again I see – they are loans at 2.25% above Bank Base Rate – the exact same rate we pay on our overdraft facility. All of the above is in the accounts.

Still not sure if Rob Waugh is going to try and go one better this year, but still wondering what could have been – would Owlsonline have a Paul Foot award if we’d submitted the exact same story as Waugh did – all of which was on here weeks before he wrote it in the press…….

Hate that two of Dave Allen’s quotes are so good, but “Why are (these investors) always a mystery.” and is it “all spin, hype and talk.”

Somebody has to chair the club and i am thankful for someone like Lee Strafford a successful business man with an entrepreneurial spirit. This man is not being paid for the role and has Wednesday in his heart. I see the idea to sell tickets in an advance capacity is a strategically positive move which if goes to plan can help us be prepared to move in the transfer market when opportunities arise that co-inside with our goals and squad ambitions.
Some people will never be happy and maybe some people from the past failed regimes do not want to to see others succeed where they have not due to their bitterness.

“This man is not being paid for the role and has Wednesday in his heart.”

How do you know he isn’t being paid, because he says so? I wouldn’t believe a word he says. As for having Wednesday in his heart….absolute rubbish. We were a mid table team until he came along and made his “improvements”. Now look at us.

2. Plenty of ways to get investment without anyone actually buying shares. Although thats not the main point from that particular part- how much detail do you want?

More to the point, how much detail do you expect from potential investors?

Are any of them really going to be stupid enough to spell out exactly what they are planning to do for the whole world to see, when they apparently see it as a way of making money? Wouldn’t that then open the door to anyone, using their plans, and defeat the object?

Ken- putting season ticket sales on in January makes sense. It’s far from raising cash-flow concerns, in fact it’s a move to avoid cash flow concerns come june, when, under the more traditional method, we are strengthening the squad with absolutely no idea of finance levels.

David Wood- ignoring the pointlessness of an argument that dictates a chairmans thoughts can be decided on mangerial performance over 1 half of a season, rather than his own actions, how exactly were we midtable before he arrived?

The season before he arrived we required a last day victory to survive- not really mid-table is it?

Still, to acknowledge fact would be to ruin your obvious hatred of a man who, in reality, has done little wrong

David – don’t be silly. If you we actually a Wednesday fan and had been to the games you would see how much better we are under Lee than our former regime.

In terms of the wider article I agree that the slant about Lee’s comments on admin mis-represents how it actually came out. Lee did not just suddenly announce we are not going into admin (everynight on Radio Sheff someone suggests admin, and the quote is a direct response to a question from a fan on a phone in).

Great article Mark (or is it “Mark”?). I’ve reached the point (well I’ve actually repeatedly reached the point over the last couple of years) whereby I’m no longer traumatised by the thought of us folding entirely and a new FC Wednesday (or whatever) starting afresh. It’d be nice to support a club which I believed in for a change, as it’s getting a bit tiresome to define my football fandom by who I despise rather than who I love.

But having said that, I want to believe in Stafford. Compared to the ridiculous buffoons and corrupt cretins who’ve run this club going back to (and very much including) Dodgy Dave Richards, he at least comes across as a man with some form of plan. However, I realise that not being as bad as others does not make someone a saviour.

Daniel – We finished 12th last season. If you were a fan you’d have known that. We are now the second worst side in South Yorkshire. Well done Lee, what a fantastic job you are doing. May you be our chairman for many years to come and when we arrive in the Conference these sycophantic fools might admit they were wrong about you.

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